Checking the Reputation of the Bulgarian Developer
In the specific case of buying an off-plan apartment in Bulgaria, besides the usual legal checks, it is advisable to make enquiries into the reputation of the developer. It is also useful to view his previous projects that have been finalised.
The preliminary contract represents a legal commitment between both parties.The seller commits to sell the property and the buyer commits to buy it. you do not have to certify the preliminary contract in front of the notary in order for it to be valid, although, if you do so, this provides more protection for both parties. The preliminary contract is usually drafted and signed in Bulgarian. In case any of the signing parties does not understand Bulgarian, there should be a licensed interpreter present at the signing, and the contract must be translated.There is no problem if the contract is also signed in English if,for example, both parties are English and understand the language, but if the contract needs to be presented to the court or any other state or local institutions, it should be officially translated into Bulgarian by a licensed translation agency. If your lawyer is signing the preliminary contract on your behalf,you may still ask for a translation so that you understand the terms and conditions.
In general your lawyer will check the existing notary act of the current owner or seller. He or she will check the history of the Bulgarian property that you are buying and also if there are any encumbrances on it – mortgages, court claims, court injunctions and so on. Since all notary acts are registered with the Registry Agency, it is possible to trace the history of the property and all previous transactions.
When you have chosen a property in Bulgaria you wish to purchase, the seller, through the agent, may ask you to pay a reservation deposit and sign a reservation contract in order to take the property off the market (this is normally the practice when buying an off-plan apartment in Bulgaria, and is not so common with house purchases in Bulgaria, in case your Bulgarian company is registered and you are ready to pay 100% of the money). The amount is normally 10% of the property price. Paying this deposit shows your serious intentions and interest in buying the property in Bulgaria.
It is very rare to have a deal completed and all legal checks made while you are in the country on your first visit. Most deals take 1-2 months to complete. You can return to Bulgaria at every stage during the conveyancing process to sign the documents, but this is not really a practical or cost-effective solution. In most cases therefore it will be necessary to leave power of attorney with your representatives in Bulgaria.
Of course this is something that can be arranged before choosing a property and agreeing the price, but in practice most people first have contact with a lawyer at this stage of the process. In fact there are no legal requirements to use a lawyer, since the actual rights of ownership over a property can be transferred by a notary with a notary act. A notary is a licensed official who can authenticate documents and perform certain other acts. On the day of the deal they will verify who the buyer and seller are and check that all the paperwork is in order to complete the deal legally.The lawyer’s role is different.The lawyer’s role is to ensure that your interests specifically are being satisfied and to check all the documents are in order so that the notary can legalise the deal.
The procedure for buying a property in Bulgaria is different from the procedure in the UK. This is so, not only because the law and the legal system as a whole are different, but also because of the different habits and traditions of the country. There are some similarities, of course, but in general it is best to understand the specifics and the procedure, rather than try to compare it and make conclusions on the basis of what you know from the UK property buying process.
There are two broad definitions of land in Bulgaria: unregulated and regulated. Unregulated land is land that has strict control over its use and what can be built on it. In most cases unregulated land is used for agricultural purposes, and only buildings associated with this sector are permitted to be built. It is possible to change the status of unregulated land, but the process is complex and takes up to ю months to complete. An EU citizen or company is now permitted to own agricultural land as long as they are agricultural producers and are carrying out agricultural activities.
You may be considering adding your children as co-owners of your property in Bulgaria at the time of purchase, to save inheritance tax when you die. On your death you would only own, say, one-fifth of the property rather than one half, and only that part will be taxable. This only works sensibly if they are over 18. Of course there are drawbacks.
At present time, most people currently buying a property with land in Bulgaria still do so via a company-irrespective of the new rights of EU citizens.
The company is owned by the shareholders (you) and the company owns the property. It is a perfectly legal procedure and costs a bout €300-750 (£200-500) to register the company (including all the state taxes and legal fees).There can be more than one shareholder. You will have to decide on a name for the company, deposit in a bank at least 3,500 leva (€1,800) as initial start-up capital (the bank account is called a capital-raising account), sign many documents and wait about two weeks for the process to be completed. Your lawyer or estate agent would be able to arrange this on your behalf in your absence by using power of attorney.